The One Habit Every Financially Independent Person Shares

Links to speak to today's guests:
Thuy Lam: buildwealthcanada.ca/plan
Alanna Abramsky: broadmoney.ca

After conducting hundreds of interviews over the past 10 years with different financial experts and those who have been able to hit their financial independence number early, one of the common themes and best practices that I’ve noticed emerge time and time again is that those who are wealthy actually track their spending.

At the end of the day, knowing what you spend every year on essential expenses versus discretionary expenses like vacations and fun activities lets you actually forecast with pretty good accuracy how much you need to become financially independent so that you can retire early if you wish.

It’s also one of the key, critical ingredients that you need to be able to know whether you can sustainably live off your portfolio, and for how long.

Now, I will admit, tracking expenses is not something that I personally find fun. It’s one more thing to do, and we’re all busy enough as it is. But literally every single financial planner that I have ever worked with over the years who knew what they were doing, and every single person that I’ve talked to who was able to retire early or reach financial independence early, had expenses as one of the key components that they managed and that they needed to know to be able to determine with accuracy when it is safe to stop working and live off your investments forever.

It really is a skill and process worth developing that you will literally be using your whole life. My wife and I have now been either fully retired or semi-retired for the past 9 years here in Canada, and I can tell you that knowing our expenses year to year has been critical in making sure that we don’t overspend and have to go back to work. And, as I’ve mentioned in the past, knowing this has also been a huge financial anxiety reducer for me personally, since you actually know how much you have and how much you need, and so you aren’t in a state of anxiety every time that the credit card bill comes in, hoping that you and your family didn’t overspend this month.

In this episode, I invited 2 highly experienced financial coaches here in Canada to discuss how we should be tracking our expenses, whether we actually need a traditional budget, the different processes that we can follow to properly manage this key component of our financial lives as efficiently as possible, and what tools we can use here in Canada to make this whole process less tedious and more automated and productive.

Our first guest is Thuy Lam. Thuy is a Certified Financial Planner (CFP) with over 20 years in financial planning, financial coaching, wealth management, and business consulting experience. She enjoys working with clients who value financial advice conveyed in an easy-to-understand fashion, and especially those looking for help with cash flow planning while going through a life change, such as a new job or career, marriage, divorce, or retirement. I've worked with Thuy personally, and she's been amazing at helping my wife and I plan out our finances in our early retirement.

Our second guest is Alanna Abramsky. She has been financial coaching for over 10 years and has helped more than 1,000 Canadians over this time. She has over 30 years of experience in the personal finance field, and she started Broad Money with the mission of empowering Canadians to take control of their financial futures, offering support and guidance every step of the way.